Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2020 | Oct. 19, 2020 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2020 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q3 | |
Trading Symbol | MSTR | |
Entity Registrant Name | MICROSTRATEGY INCORPORATED | |
Entity Central Index Key | 0001050446 | |
Entity Interactive Data Current | Yes | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Title of 12(b) Security | Class A common stock, par value $0.001 per share | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Shell Company | false | |
Entity File Number | 000-24435 | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 51-0323571 | |
Entity Address, Address Line One | 1850 Towers Crescent Plaza | |
Entity Address, City or Town | Tysons Corner | |
Entity Address, State or Province | VA | |
Entity Address, Postal Zip Code | 22182 | |
City Area Code | 703 | |
Local Phone Number | 848-8600 | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Class A | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 7,252,964 | |
Class B Convertible | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 2,014,025 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 52,653 | $ 456,727 |
Restricted cash | 1,231 | 1,089 |
Short-term investments | 0 | 108,919 |
Accounts receivable, net | 148,512 | 163,516 |
Prepaid expenses and other current assets | 16,040 | 23,195 |
Total current assets | 218,436 | 753,446 |
Digital assets | 380,758 | 0 |
Property and equipment, net | 45,473 | 50,154 |
Right-of-use assets | 79,296 | 85,538 |
Deposits and other assets | 15,405 | 8,024 |
Deferred tax assets, net | 33,537 | 19,409 |
Total assets | 772,905 | 916,571 |
Current liabilities: | ||
Accounts payable, accrued expenses, and operating lease liabilities | 38,668 | 33,919 |
Accrued compensation and employee benefits | 44,177 | 48,792 |
Deferred revenue and advance payments | 160,845 | 187,107 |
Total current liabilities | 243,690 | 269,818 |
Deferred revenue and advance payments | 11,657 | 4,344 |
Operating lease liabilities | 95,591 | 103,424 |
Other long-term liabilities | 32,651 | 30,400 |
Deferred tax liabilities | 24 | 26 |
Total liabilities | 383,613 | 408,012 |
Commitments and Contingencies | ||
Stockholders’ Equity | ||
Preferred stock undesignated, $0.001 par value; 5,000 shares authorized; no shares issued or outstanding | 0 | 0 |
Additional paid-in capital | 604,974 | 593,583 |
Treasury stock, at cost; 8,684 shares and 7,807 shares, respectively | (782,104) | (658,880) |
Accumulated other comprehensive loss | (6,900) | (9,651) |
Retained earnings | 573,304 | 583,489 |
Total stockholders’ equity | 389,292 | 508,559 |
Total liabilities and stockholders’ equity | 772,905 | 916,571 |
Class A | ||
Stockholders’ Equity | ||
Common stock | 16 | 16 |
Total stockholders’ equity | 16 | 16 |
Class B Convertible | ||
Stockholders’ Equity | ||
Common stock | 2 | 2 |
Total stockholders’ equity | $ 2 | $ 2 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Sep. 30, 2020 | Dec. 31, 2019 |
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Treasury stock, shares | 8,684,000 | 7,807,000 |
Class A | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 330,000,000 | 330,000,000 |
Common stock, shares issued | 15,937,000 | 15,888,000 |
Common stock, shares outstanding | 7,253,000 | 8,081,000 |
Class B Convertible | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 165,000,000 | 165,000,000 |
Common stock, shares issued | 2,014,000 | 2,035,000 |
Common stock, shares outstanding | 2,014,000 | 2,035,000 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | ||
Revenues: | |||||
Total revenues | $ 127,408 | $ 119,693 | $ 349,416 | $ 352,796 | |
Cost of revenues: | |||||
Total cost of revenues | 21,736 | 23,815 | 70,270 | 75,338 | |
Gross profit | 105,672 | 95,878 | 279,146 | 277,458 | |
Operating expenses: | |||||
Sales and marketing | 35,330 | 43,935 | 109,799 | 140,968 | |
Research and development | 26,638 | 27,457 | 78,606 | 83,436 | |
General and administrative | 19,733 | 19,900 | 60,514 | 63,684 | |
Digital asset impairment losses | 44,242 | 0 | 44,242 | 0 | |
Total operating expenses | 125,943 | 91,292 | 293,161 | 288,088 | |
(Loss) income from operations | (20,271) | 4,586 | (14,015) | (10,630) | |
Interest income, net | 209 | 2,941 | 2,627 | 8,520 | |
Other (expense) income, net | (2,971) | 1,882 | (4,532) | 30,717 | |
(Loss) income before income taxes | (23,033) | 9,409 | (15,920) | 28,607 | |
(Benefit from) provision for income taxes | (8,804) | (291) | (5,735) | 6,419 | |
Net (loss) income | $ (14,229) | $ 9,700 | $ (10,185) | $ 22,188 | |
Basic earnings per share | [1] | $ (1.48) | $ 0.95 | $ (1.04) | $ 2.16 |
Weighted average shares outstanding used in computing basic (loss) earnings per share | 9,616 | 10,251 | 9,777 | 10,273 | |
Diluted earnings per share | [1] | $ (1.48) | $ 0.94 | $ (1.04) | $ 2.15 |
Weighted average shares outstanding used in computing diluted (loss) earnings per share | 9,616 | 10,309 | 9,777 | 10,336 | |
Product licenses | |||||
Revenues: | |||||
Total revenues | $ 29,573 | $ 18,972 | $ 56,973 | $ 57,384 | |
Cost of revenues: | |||||
Total cost of revenues | 545 | 526 | 1,729 | 1,597 | |
Subscription services | |||||
Revenues: | |||||
Total revenues | 8,305 | 7,894 | 24,294 | 22,142 | |
Cost of revenues: | |||||
Total cost of revenues | 3,656 | 3,889 | 11,512 | 10,976 | |
Total product licenses and subscription services | |||||
Revenues: | |||||
Total revenues | 37,878 | 26,866 | 81,267 | 79,526 | |
Cost of revenues: | |||||
Total cost of revenues | 4,201 | 4,415 | 13,241 | 12,573 | |
Product support | |||||
Revenues: | |||||
Total revenues | 71,352 | 72,885 | 212,548 | 217,313 | |
Cost of revenues: | |||||
Total cost of revenues | 5,679 | 6,922 | 19,234 | 21,710 | |
Other services | |||||
Revenues: | |||||
Total revenues | 18,178 | 19,942 | 55,601 | 55,957 | |
Cost of revenues: | |||||
Total cost of revenues | $ 11,856 | $ 12,478 | $ 37,795 | $ 41,055 | |
[1] | Basic and fully diluted (loss) earnings per share for class A and class B common stock are the same. |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Statement Of Income And Comprehensive Income [Abstract] | ||||
Net (loss) income | $ (14,229) | $ 9,700 | $ (10,185) | $ 22,188 |
Other comprehensive income (loss), net of applicable taxes: | ||||
Foreign currency translation adjustment | 2,612 | (2,182) | 2,898 | (1,922) |
Unrealized (loss) gain on short-term investments | (325) | (182) | (147) | 465 |
Total other comprehensive income (loss) | 2,287 | (2,364) | 2,751 | (1,457) |
Comprehensive (loss) income | $ (11,942) | $ 7,336 | $ (7,434) | $ 20,731 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands | Total | Class A | Class B Convertible | Additional Paid-in Capital | Treasury Stock | Accumulated Other Comprehensive Income (Loss) | Retained Earnings |
Beginning Balance at Dec. 31, 2018 | $ 529,731 | $ 16 | $ 2 | $ 576,957 | $ (586,161) | $ (10,217) | $ 549,134 |
Beginning Balance (in shares) at Dec. 31, 2018 | 15,837 | 2,035 | (7,285) | ||||
Net income (loss) | (7,906) | $ 0 | $ 0 | 0 | $ 0 | 0 | (7,906) |
Other comprehensive income (loss) | 253 | 0 | 0 | 0 | 0 | 253 | 0 |
Issuance of class A common stock under stock option plans | 1,507 | $ 0 | $ 0 | 1,507 | $ 0 | 0 | 0 |
Issuance of class A common stock under stock option plans (in shares) | 13 | 0 | 0 | ||||
Purchases of treasury stock | (48,244) | $ 0 | $ 0 | 0 | $ (48,244) | 0 | 0 |
Purchases of treasury stock (in shares) | 0 | 0 | (363) | ||||
Share-based compensation expense | 2,965 | $ 0 | $ 0 | 2,965 | $ 0 | 0 | 0 |
Ending Balance at Mar. 31, 2019 | 478,306 | $ 16 | $ 2 | 581,429 | $ (634,405) | (9,964) | 541,228 |
Ending Balance (in shares) at Mar. 31, 2019 | 15,850 | 2,035 | (7,648) | ||||
Beginning Balance at Dec. 31, 2018 | 529,731 | $ 16 | $ 2 | 576,957 | $ (586,161) | (10,217) | 549,134 |
Beginning Balance (in shares) at Dec. 31, 2018 | 15,837 | 2,035 | (7,285) | ||||
Net income (loss) | 22,188 | ||||||
Other comprehensive income (loss) | (1,457) | ||||||
Ending Balance at Sep. 30, 2019 | 515,419 | $ 16 | $ 2 | 590,158 | $ (634,405) | (11,674) | 571,322 |
Ending Balance (in shares) at Sep. 30, 2019 | 15,880 | 2,035 | (7,648) | ||||
Beginning Balance at Mar. 31, 2019 | 478,306 | $ 16 | $ 2 | 581,429 | $ (634,405) | (9,964) | 541,228 |
Beginning Balance (in shares) at Mar. 31, 2019 | 15,850 | 2,035 | (7,648) | ||||
Net income (loss) | 20,394 | $ 0 | $ 0 | 0 | $ 0 | 0 | 20,394 |
Other comprehensive income (loss) | 654 | 0 | 0 | 0 | 0 | 654 | 0 |
Issuance of class A common stock under stock option plans | 329 | $ 0 | $ 0 | 329 | $ 0 | 0 | 0 |
Issuance of class A common stock under stock option plans (in shares) | 3 | 0 | 0 | ||||
Share-based compensation expense | 3,006 | $ 0 | $ 0 | 3,006 | $ 0 | 0 | 0 |
Ending Balance at Jun. 30, 2019 | 502,689 | $ 16 | $ 2 | 584,764 | $ (634,405) | (9,310) | 561,622 |
Ending Balance (in shares) at Jun. 30, 2019 | 15,853 | 2,035 | (7,648) | ||||
Net income (loss) | 9,700 | $ 0 | $ 0 | 0 | $ 0 | 0 | 9,700 |
Other comprehensive income (loss) | (2,364) | 0 | 0 | 0 | 0 | (2,364) | 0 |
Issuance of class A common stock under stock option plans | 3,606 | $ 0 | $ 0 | 3,606 | $ 0 | 0 | 0 |
Issuance of class A common stock under stock option plans (in shares) | 27 | 0 | 0 | ||||
Share-based compensation expense | 1,788 | $ 0 | $ 0 | 1,788 | $ 0 | 0 | 0 |
Ending Balance at Sep. 30, 2019 | 515,419 | $ 16 | $ 2 | 590,158 | $ (634,405) | (11,674) | 571,322 |
Ending Balance (in shares) at Sep. 30, 2019 | 15,880 | 2,035 | (7,648) | ||||
Net income (loss) | 12,167 | $ 0 | $ 0 | 0 | $ 0 | 0 | 12,167 |
Other comprehensive income (loss) | 2,023 | 0 | 0 | 0 | 0 | 2,023 | 0 |
Issuance of class A common stock under stock option plans | 1,127 | $ 0 | $ 0 | 1,127 | $ 0 | 0 | 0 |
Issuance of class A common stock under stock option plans (in shares) | 8 | 0 | 0 | ||||
Purchases of treasury stock | (24,475) | $ 0 | $ 0 | 0 | $ (24,475) | 0 | 0 |
Purchases of treasury stock (in shares) | 0 | 0 | (159) | ||||
Share-based compensation expense | 2,298 | $ 0 | $ 0 | 2,298 | $ 0 | 0 | 0 |
Ending Balance at Dec. 31, 2019 | 508,559 | $ 16 | $ 2 | 593,583 | $ (658,880) | (9,651) | 583,489 |
Ending Balance (in shares) at Dec. 31, 2019 | 15,888 | 2,035 | (7,807) | ||||
Net income (loss) | 657 | $ 0 | $ 0 | 0 | $ 0 | 0 | 657 |
Other comprehensive income (loss) | (547) | 0 | 0 | 0 | 0 | (547) | 0 |
Issuance of class A common stock under stock option plans | 340 | $ 0 | $ 0 | 340 | $ 0 | 0 | 0 |
Issuance of class A common stock under stock option plans (in shares) | 3 | 0 | 0 | ||||
Purchases of treasury stock | (50,747) | $ 0 | $ 0 | 0 | $ (50,747) | 0 | 0 |
Purchases of treasury stock (in shares) | 0 | 0 | (355) | ||||
Share-based compensation expense | 3,164 | $ 0 | $ 0 | 3,164 | $ 0 | 0 | 0 |
Ending Balance at Mar. 31, 2020 | 461,426 | $ 16 | $ 2 | 597,087 | $ (709,627) | (10,198) | 584,146 |
Ending Balance (in shares) at Mar. 31, 2020 | 15,891 | 2,035 | (8,162) | ||||
Beginning Balance at Dec. 31, 2019 | 508,559 | $ 16 | $ 2 | 593,583 | $ (658,880) | (9,651) | 583,489 |
Beginning Balance (in shares) at Dec. 31, 2019 | 15,888 | 2,035 | (7,807) | ||||
Net income (loss) | (10,185) | ||||||
Other comprehensive income (loss) | 2,751 | ||||||
Ending Balance at Sep. 30, 2020 | 389,292 | $ 16 | $ 2 | 604,974 | $ (782,104) | (6,900) | 573,304 |
Ending Balance (in shares) at Sep. 30, 2020 | 15,937 | 2,014 | (8,684) | ||||
Beginning Balance at Mar. 31, 2020 | 461,426 | $ 16 | $ 2 | 597,087 | $ (709,627) | (10,198) | 584,146 |
Beginning Balance (in shares) at Mar. 31, 2020 | 15,891 | 2,035 | (8,162) | ||||
Net income (loss) | 3,387 | $ 0 | $ 0 | 0 | $ 0 | 0 | 3,387 |
Other comprehensive income (loss) | 1,011 | 0 | 0 | 0 | 0 | 1,011 | 0 |
Issuance of class A common stock under stock option plans | 1,562 | $ 0 | $ 0 | 1,562 | $ 0 | 0 | 0 |
Issuance of class A common stock under stock option plans (in shares) | 12 | 0 | 0 | ||||
Purchases of treasury stock | (11,128) | $ 0 | $ 0 | 0 | $ (11,128) | 0 | 0 |
Purchases of treasury stock (in shares) | 0 | 0 | (90) | ||||
Share-based compensation expense | 2,202 | $ 0 | $ 0 | 2,202 | $ 0 | 0 | 0 |
Ending Balance at Jun. 30, 2020 | 458,460 | $ 16 | $ 2 | 600,851 | $ (720,755) | (9,187) | 587,533 |
Ending Balance (in shares) at Jun. 30, 2020 | 15,903 | 2,035 | (8,252) | ||||
Net income (loss) | (14,229) | $ 0 | $ 0 | 0 | $ 0 | 0 | (14,229) |
Other comprehensive income (loss) | 2,287 | 0 | 0 | 0 | 0 | 2,287 | 0 |
Conversion of class B to class A common stock | 0 | $ 0 | $ 0 | 0 | $ 0 | 0 | 0 |
Conversion of class B to class A common stock (in shares) | 21 | (21) | 0 | ||||
Issuance of class A common stock under stock option plans | 1,714 | $ 0 | $ 0 | 1,714 | $ 0 | 0 | 0 |
Issuance of class A common stock under stock option plans (in shares) | 13 | 0 | 0 | ||||
Purchases of treasury stock | (61,349) | $ 0 | $ 0 | 0 | $ (61,349) | 0 | 0 |
Purchases of treasury stock (in shares) | 0 | 0 | (432) | ||||
Share-based compensation expense | 2,409 | $ 0 | $ 0 | 2,409 | $ 0 | 0 | 0 |
Ending Balance at Sep. 30, 2020 | $ 389,292 | $ 16 | $ 2 | $ 604,974 | $ (782,104) | $ (6,900) | $ 573,304 |
Ending Balance (in shares) at Sep. 30, 2020 | 15,937 | 2,014 | (8,684) |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Operating activities: | ||
Net (loss) income | $ (10,185) | $ 22,188 |
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||
Depreciation and amortization | 9,342 | 5,456 |
Reduction in carrying amount of right-of-use assets | 6,134 | 6,087 |
Credit losses and sales allowances | 1,874 | 892 |
Net realized (gain) loss on short-term investments | (94) | 41 |
Deferred taxes | (13,341) | (3,352) |
Release of liabilities for unrecognized tax benefits | 0 | (1,077) |
Share-based compensation expense | 7,897 | 7,887 |
Digital asset impairment losses | 44,242 | 0 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 6,439 | 11,781 |
Prepaid expenses and other current assets | 391 | 4,513 |
Deposits and other assets | (175) | 349 |
Accounts payable and accrued expenses | 902 | (11,618) |
Accrued compensation and employee benefits | (7,221) | (7,368) |
Deferred revenue and advance payments | (12,385) | 23,612 |
Operating lease liabilities | (7,148) | (6,394) |
Other long-term liabilities | 1,625 | (674) |
Net cash provided by operating activities | 28,297 | 52,323 |
Investing activities: | ||
Purchases of digital assets | (425,000) | 0 |
Proceeds from redemption of short-term investments | 119,886 | 589,357 |
Purchases of property and equipment | (1,162) | (9,382) |
Purchases of short-term investments | (9,928) | (320,487) |
Net cash (used in) provided by investing activities | (316,204) | 259,488 |
Financing activities: | ||
Proceeds from sale of class A common stock under exercise of employee stock options | 3,616 | 5,442 |
Purchases of treasury stock | (122,480) | (48,244) |
Net cash used in financing activities | (118,864) | (42,802) |
Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash | 2,839 | (3,926) |
Net (decrease) increase in cash, cash equivalents, and restricted cash | (403,932) | 265,083 |
Cash, cash equivalents, and restricted cash, beginning of period | 457,816 | 110,786 |
Cash, cash equivalents, and restricted cash, end of period | $ 53,884 | $ 375,869 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | (1) Summary of Significant Accounting Policies (a) Basis of Presentation The accompanying Consolidated Financial Statements of MicroStrategy Incorporated (“MicroStrategy” or the “Company”) are unaudited. In the opinion of management, all adjustments necessary for a fair statement of financial position and results of operations have been included. All such adjustments are of a normal recurring nature, unless otherwise disclosed. Interim results are not necessarily indicative of results for a full year. Certain amounts in the prior year’s Consolidated Statements of Cash Flows have been reclassified to conform to current year presentation. In particular, reductions in the carrying amount of right-of-use (“ROU”) assets have been reclassified from “Depreciation and amortization” to “Reduction in carrying amount of right-of-use assets” in operating activities. As discussed in Note 2, Recent Accounting Standards, to the Consolidated Financial Statements, the Company adopted Accounting Standards Update No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, The Consolidated Financial Statements and Notes to Consolidated Financial Statements are presented as required by the United States Securities and Exchange Commission (“SEC”) and do not contain certain information included in the Company’s annual financial statements and notes. These financial statements should be read in conjunction with the Company’s audited financial statements and the notes thereto filed with the SEC in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. Except for a new accounting policy to account for the Company’s acquisition of digital assets and its adoption of ASU 2016-13, as discussed below, there have been no significant changes in the Company’s accounting policies since December 31, 2019. The accompanying Consolidated Financial Statements include the accounts of the Company and its subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. The Company is not aware of any material subsequent event that would require recognition or disclosure. (b) Short-term Investments The Company has periodically invested a portion of its cash in short-term investment instruments. All highly liquid investments with stated maturity dates between three months and one year from the purchase date are classified as short-term investments. The Company determines the appropriate classification of its short-term investments at the time of purchase and reassesses the appropriateness of the classification at each reporting date. All of the Company’s short-term investments are in U.S. Treasury securities. All short-term investments have been classified as available-for-sale and are reported at fair value within “Short-term investments” on the accompanying Consolidated Balance Sheets. The fair value of the Company’s short-term investments is determined based on quoted market prices in active markets for identical securities (Level 1 inputs). Premiums and discounts related to the Company’s short-term investments are amortized over the life of the investment and recorded in earnings. Each reporting period, the Company determines the amount of unrealized holding gains and losses on each individual security by comparing the fair value to the amortized cost. Unrealized holding gains and unrealized holding losses that are not a result of a credit loss are reported in other comprehensive income (loss) until realized. Beginning January 1, 2020, unrealized holding losses that are a result of a credit loss are recorded in earnings, with the establishment of an allowance for credit losses. As of September 30, 2020, the Company did not hold any short-term investments. (c) Credit Losses on Accounts Receivable The Company maintains an allowance for credit losses on its accounts receivable balances, which represents its best estimate of current expected credit losses over the contractual life of the accounts receivable. Beginning January 1, 2020, when evaluating the adequacy of its allowance for credit losses each reporting period, the Company analyzes accounts receivable balances with similar risk characteristics on a collective basis, considering factors such as the aging of receivable balances, payment terms, geographic location, historical loss experience, current information, and future expectations. Each reporting period, the Company reassesses whether any accounts receivable no longer share similar risk characteristics and should instead be evaluated as part of another pool or on an individual basis. Changes to the allowance for credit losses are adjusted through credit loss expense, which is presented within “General and administrative” operating expenses in the Consolidated Statements of Operations. (d) Digital Assets During the third quarter of 2020, the Company purchased an aggregate of $425.0 million in digital assets, comprised solely of bitcoin. The Company accounts for its digital assets as indefinite-lived intangible assets in accordance with Accounting Standards Codification (“ASC”) 350, Intangibles—Goodwill and Other The Company determines the fair value of its bitcoin on a nonrecurring basis in accordance with ASC 820, Fair Value Measurement Impairment losses are recognized as “Digital asset impairment losses” in the Company’s Consolidated Statements of Operations in the period in which the impairment is identified. The impaired digital assets are written down to their fair value at the time of impairment and this new cost basis will not be adjusted upward for any subsequent increase in fair value. Gains (if any) are not recorded until realized upon sale, at which point they would be presented net of any impairment losses in the Company’s Consolidated Statements of Operations. In determining the gain to be recognized upon sale, the Company calculates the difference between the sales price and carrying value of the specific bitcoins sold immediately prior to sale. See Note 4, Digital Assets, to the Consolidated Financial Statements for further information regarding the Company’s purchases of digital assets. |
Recent Accounting Standards
Recent Accounting Standards | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Changes And Error Corrections [Abstract] | |
Recent Accounting Standards | (2) Recent Accounting Standards Credit losses The Company adopted ASU 2016-13 effective as of January 1, 2020. Under ASU 2016-13, the Company applies a current expected credit loss (“CECL”) impairment model to its trade accounts receivable, in which lifetime expected credit losses on such financial assets are measured and recognized at each reporting date based on historical, current, and forecasted information. Under the CECL model, trade accounts receivable with similar risk characteristics are analyzed on a collective (pooled) basis. ASU 2016-13 also changed the impairment accounting for available-for-sale debt securities, requiring credit losses to be recorded through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities. Impairment due to factors other than credit loss will continue to be recorded through other comprehensive income (loss). Since adoption of this guidance, all of the Company’s available-for-sale debt securities have consisted of U.S. Treasury securities with stated maturity dates between three months and one year from the purchase date and none of these investments have been impaired at periods’ end. As of September 30, 2020, the Company did not hold any short-term investments. The adoption of this guidance did not have a material impact on the Company’s consolidated financial position, results of operations, or cash flows. No cumulative-effect adjustment to retained earnings was made. Cloud computing arrangements The Company adopted Accounting Standards Update No. 2018-15, Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract Accounting for income taxes In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes |
Short-term Investments
Short-term Investments | 9 Months Ended |
Sep. 30, 2020 | |
Short Term Investments [Abstract] | |
Short-term Investments | (3) Short-term Investments As of September 30, 2020, the Company did not hold any short-term investment instruments. The amortized cost and fair value of available-for-sale investments at December 31, 2019 were $108.8 million and $108.9 million, respectively. The gross unrecognized holding gains accumulated in other comprehensive loss were not material as of December 31, 2019. As of December 31, 2019, none of the Company’s available-for-sale investments were in unrealized loss positions. |
Digital Assets
Digital Assets | 9 Months Ended |
Sep. 30, 2020 | |
Intangible Assets Net Excluding Goodwill [Abstract] | |
Digital Assets | (4) Digital Assets During the three months ended September 30, 2020, the Company purchased approximately 38,250 bitcoins for $425.0 million in cash. During the three months ended September 30, 2020, the Company incurred $44.2 million of impairment losses on its bitcoin. As of September 30, 2020, the carrying value of the Company’s bitcoin was $380.8 million, which reflects cumulative impairments of $44.2 million. The carrying value represents the lowest fair value of the bitcoins at any time since their acquisition. The Company did not sell any of its bitcoins during the three months ended September 30, 2020. |
Contract Balances
Contract Balances | 9 Months Ended |
Sep. 30, 2020 | |
Contract With Customer Asset And Liability [Abstract] | |
Contract Balances | (5) Contract Balances The Company invoices its customers in accordance with billing schedules established in each contract. The Company’s rights to consideration from customers are presented separately in the Company’s Consolidated Balance Sheets depending on whether those rights are conditional or unconditional. The Company presents unconditional rights to consideration from customers within “Accounts receivable, net” in its Consolidated Balance Sheets. All of the Company’s contracts are generally non-cancellable and/or non-refundable, and therefore an unconditional right generally exists when the customer is billed or amounts are billable per the contract. Accounts receivable (in thousands) consisted of the following, as of: September 30, December 31, 2020 2019 Billed and billable $ 151,234 $ 165,153 Less: allowance for credit losses (2,722 ) (1,637 ) Accounts receivable, net $ 148,512 $ 163,516 Changes in the allowance for credit losses were not material for the three and nine months ended September 30, 2020. In estimating its allowance for credit losses as of September 30, 2020, the Company considered the impact from the pandemic caused by a novel strain of coronavirus (“COVID-19”) and established additional risk pools and reserves relating to customers in certain geographic areas and industries, in addition to separately assessing the reserves for certain customers that have been granted extended payment terms. Rights to consideration that are subject to a condition other than the passage of time are considered contract assets and presented within “Prepaid expenses and other current assets” in the Consolidated Balance Sheets since the rights to consideration are expected to become unconditional and transfer to accounts receivable within one year. Contract assets generally consist of accrued sales and usage-based royalty revenue. In these arrangements, consideration is not billed or billable until the royalty reporting is received, generally in the subsequent quarter, at which time the contract asset transfers to accounts receivable and a true-up adjustment is recorded to revenue. These true-up adjustments are generally not material. During the three and nine months ended September 30, 2020 and 2019, there were no significant impairments to the Company’s contract assets, nor were there any significant changes in the timing of the Company’s contract assets being reclassified to accounts receivable. Contract assets included in “Prepaid expenses and other current assets” in the Consolidated Balance Sheets consisted of $1.1 million and $1.2 million in accrued sales and usage-based royalty revenue as of September 30, 2020 and December 31, 2019, respectively. Contract liabilities are amounts received or due from customers in advance of the Company transferring the software or services to the customer. In the case of multi-year service contracts arrangements, the Company generally does not invoice more than one year in advance of services and does not record any deferred revenue for amounts that have not been invoiced and that require an additional contract . Revenue is subsequently recognized in the period(s) in which control of the software or services is transferred to the customer. The Company’s contract liabilities are presented as either current or non-current “Deferred revenue and advance payments” in the Consolidated Balance Sheets, depending on whether the software or services are expected to be transferred to the customer within the next year. The Company’s “Accounts receivable, net” and “Deferred revenue and advance payments” balances in the Consolidated Balance Sheets include unpaid amounts related to contracts under which the Company has an enforceable right to invoice the customer for non-cancellable and/or non-refundable software and services. Changes in accounts receivable and changes in deferred revenue and advance payments are presented net of these unpaid amounts in “Operating activities” in the Consolidated Statements of Cash Flows. Deferred revenue and advance payments (in thousands) from customers consisted of the following, as of: September 30, December 31, 2020 2019 Current: Deferred product licenses revenue $ 186 $ 481 Deferred subscription services revenue 19,535 16,561 Deferred product support revenue 134,632 161,670 Deferred other services revenue 6,492 8,395 Total current deferred revenue and advance payments $ 160,845 $ 187,107 Non-current: Deferred product licenses revenue $ 140 $ 293 Deferred subscription services revenue 5,988 97 Deferred product support revenue 4,759 3,417 Deferred other services revenue 770 537 Total non-current deferred revenue and advance payments $ 11,657 $ 4,344 During the three and nine months ended September 30, 2020, the Company recognized revenues of $37.3 million and $160.5 million, respectively, from amounts included in the total deferred revenue and advance payments balances at the beginning of 2020. During the three and nine months ended September 30, 2019, the Company recognized revenues of $36.1 million and $154.1 million, respectively, from amounts included in the total deferred revenue and advance payments balances at the beginning of 2019. For the three and nine months ended September 30, 2020 and 2019, there were no significant changes in the timing of revenue recognition on the Company’s deferred balances. As of September 30, 2020, the Company had an aggregate transaction price of $172.5 million allocated to remaining performance obligations related to product support, subscription services, other services, and, in limited cases, product licenses contracts. The Company expects to recognize $160.8 million within the next 12 months and $11.7 million thereafter |
Leases
Leases | 9 Months Ended |
Sep. 30, 2020 | |
Leases [Abstract] | |
Leases | (6) Leases The Company leases office space in the United States and foreign locations under operating lease agreements. Office space is the Company’s only material underlying asset class under operating lease agreements. The Company has no material finance leases. Under the Company’s office space lease agreements, fixed payments and variable payments that depend on an index or rate are typically comprised of base rent and parking fees. Additionally, under these agreements the Company is generally responsible for certain variable payments that typically include certain taxes, utilities and maintenance costs, and other fees. These variable lease payments are generally based on the Company’s occupation or usage percentages and are subject to adjustments by the lessor. As of September 30, 2020, the Company’s ROU assets and total lease liabilities were $67.6 million and $93.1 million, respectively, for leases in the United States and $11.7 million and $12.6 million, respectively, for foreign leases. As of December 31, 2019, the Company’s ROU assets and total lease liabilities were $71.0 million and $97.5 million, respectively, for leases in the United States and $14.5 million and $15.5 million, respectively, for foreign leases. The Company’s most significant lease is for its corporate headquarters in Northern Virginia. The ROU asset and total lease liability related to the Company’s corporate headquarters lease were $64.1 million and $89.6 million, respectively, as of September 30, 2020, and $66.9 million and $93.3 million, respectively, as of December 31, 2019. During the nine months ended September 30, 2020, $0.7 million of ROU assets were obtained in exchange for new operating lease liabilities. During the nine months ended September 30, 2019, $5.0 million of ROU assets were obtained in exchange for new operating lease liabilities. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2020 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | (7) Commitments and Contingencies (a) Commitments From time to time, the Company enters into certain types of contracts that require it to indemnify parties against third-party claims. These contracts primarily relate to agreements under which the Company assumes indemnity obligations for intellectual property infringement, as well as other obligations from time to time depending on arrangements negotiated with customers and other third parties. The conditions of these obligations vary. Thus, the overall maximum amount of the Company’s indemnification obligations cannot be reasonably estimated. Historically, the Company has not been obligated to make significant payments for these obligations and does not currently expect to incur any material obligations in the future. Accordingly, the Company has not recorded an indemnification liability on its Balance Sheets as of September 30, 2020 or December 31, 2019. See Note 6, Leases, to the Consolidated Financial Statements for information regarding the Company’s commitments that are related to lease agreements. See Note 9, Income Taxes, to the Consolidated Financial Statements for information regarding the Company’s commitments that are related to a mandatory deemed repatriation transition tax (“Transition Tax”) imposed under the U.S. Tax Cuts and Jobs Act (the “Tax Act”). (b) Contingencies Following an internal review initiated in 2018, the Company believes that its Brazilian subsidiary failed or likely failed to comply with local procurement regulations in conducting business with certain Brazilian government entities. On February 6, 2020, the Company learned that a Brazilian court has authorized the Brazilian Federal Police to use certain investigative measures in its investigation into alleged corruption and procurement fraud involving certain government officials, pertaining to a particular transaction. Pursuant to this court authorization, numerous entities and individuals across Brazil have been subject to the freezing of assets and other measures, including a former reseller and a former employee of the Company’s Brazilian subsidiary. On February 6, 2020, the bank accounts of the Company’s Brazilian subsidiary were also frozen up to an amount of BRL 10.0 million, or approximately $2.3 million. On May 22, 2020, these bank accounts of the Company’s Brazilian subsidiary were unfrozen on the basis of a court decision that found the alleged illicit origin of the amounts was not sufficiently evidenced. On May 25, 2020, the Federal Prosecution Office presented an appeal to this decision, but the accounts will remain unfrozen pending the outcome of the appeal. The transaction at issue is part of the basis of the previously reported failure or likely failure of the Brazilian subsidiary to comply with local procurement regulations. The Company is not a subject of the investigation, and the Company is not aware of any allegations that the former employee or the Company made any payments to Brazilian government officials. The Brazilian Federal Police has expanded its investigation to include other possible cases of procurement fraud involving Brazilian government entities; however, the Company’s Brazilian subsidiary has not been a target of any additional investigation. While the Company believes that it is probable that the resolution of these Brazilian matters will result in a loss, the amount or range of loss is not reasonably estimable at this time. Given the stage of these matters, the outcome may result in a material impact on the Company’s earnings and financial results for the period in which any such liability is accrued. However, the Company believes that the outcome of these matters will not have a material effect on the Company’s financial position. The Company is also involved in various legal proceedings arising in the normal course of business. Although the outcomes of these legal proceedings are inherently difficult to predict, management does not expect the resolution of these legal proceedings to have a material adverse effect on the Company’s financial position, results of operations, or cash flows. The Company has contingent liabilities that, in management’s judgment, are not probable of assertion. If such unasserted contingent liabilities were to be asserted, or become probable of assertion, the Company may be required to record significant expenses and liabilities in the period in which these liabilities are asserted or become probable of assertion . |
Treasury Stock
Treasury Stock | 9 Months Ended |
Sep. 30, 2020 | |
Equity [Abstract] | |
Treasury Stock | (8) Treasury Stock The Board of Directors has authorized the Company’s repurchase of up to an aggregate of $800.0 million of its class A common stock from time to time on the open market through April 29, 2023 (the “Share Repurchase Program”), although the program may be suspended or discontinued by the Company at any time. The timing and amount of any shares repurchased will be determined by the Company’s management based on its evaluation of market conditions and other factors. The Share Repurchase Program may be funded using the Company’s working capital, as well as proceeds from any other funding arrangements that the Company may enter into in the future. During the three months ended September 30, 2020, the Company did not repurchase any shares of its class A common stock pursuant to the Share Repurchase Program. During the nine months ended September 30, 2020, the Company repurchased an aggregate of 444,769 shares of its class A common stock at an average price per share of $139.12 and an aggregate cost of $61.9 million pursuant to the Share Repurchase Program. During the three months ended September 30, 2019, the Company did not repurchase any shares of its class A common stock. During the nine months ended September 30, 2019, the Company repurchased an aggregate of 362,148 shares of its class A common stock at an average price per share of $133.21 and an aggregate cost of $48.2 million pursuant to the Share Repurchase Program. As of September 30, 2020, the Company had repurchased an aggregate of 5,674,226 shares of its class A common stock at an average price per share of $104.13 and an aggregate cost of $590.9 million pursuant to the Share Repurchase Program. As of September 30, 2020, $209.1 million of the Company’s class A common stock remained available for repurchase pursuant to the Share Repurchase Program. The average price per share and aggregate cost amounts disclosed above include broker commissions. On August 11, 2020, the Company announced that it commenced a “modified Dutch Auction” tender offer (the “Offer”) to purchase up to $250.0 million in value of shares of its issued and outstanding class A common stock, or such lesser number of shares as are properly tendered and not properly withdrawn, at a price not greater than $140.00 nor less than $122.00 per share. The Offer expired at 5:00 p.m., New York City time, on September 10, 2020. During the three and nine months ended September 30, 2020, the Company repurchased an aggregate of 432,313 shares of its class A common stock through the Offer at a price of $140.00 per share for an aggregate cost of $61.3 million, inclusive of $0.8 million in certain fees and expenses related to the Offer. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | (9) Income Taxes The Company and its subsidiaries conduct business in the United States and various foreign countries and are subject to taxation in numerous domestic and foreign jurisdictions. As a result of its business activities, the Company files tax returns that are subject to examination by various U.S. federal, state, and local, and foreign tax authorities. With few exceptions, the Company is no longer subject to U.S. federal, state and local, or foreign income tax examination by tax authorities for years before 2016. However, due to the Company’s use of state net operating loss (“NOL”) carryovers in the United States, state tax authorities may attempt to reduce or fully offset the amount of state NOL carryovers from tax years ended 2011 and forward that the Company used in later tax years. The Company’s major foreign tax jurisdictions and tax years that remain subject to potential examination are Poland for tax years 2015 and forward, Spain, Germany, and Italy for tax years 2016 and forward, and the United Kingdom for tax years 2018 and forward. To date there have been no material assessments related to audits in any of the applicable foreign jurisdictions. As of September 30, 2020, the Company had unrecognized tax benefits of $2.7 million, which are recorded in “Other long-term liabilities” in the Company’s Consolidated Balance Sheet. If recognized, $2.6 million of these unrecognized tax benefits would impact the Company’s effective tax rate. The Company recognizes estimated accrued interest related to unrecognized income tax benefits in the (benefit from) provision for income tax accounts. Penalties relating to income taxes, if incurred, would also be recognized as a component of the Company’s (benefit from) provision for income taxes. Over the next 12 months, the amount of the Company’s liability for unrecognized tax benefits is not expected to change by a material amount. As of September 30, 2020, the amount of cumulative accrued interest expense on unrecognized income tax benefits was approximately $0.3 million. The following table summarizes the Company’s deferred tax assets, net of deferred tax liabilities and valuation allowance (in thousands), as of: September 30, December 31, 2020 2019 Deferred tax assets, net of deferred tax liabilities $ 35,651 $ 21,513 Valuation allowance (2,138 ) (2,130 ) Deferred tax assets, net of deferred tax liabilities and valuation allowance $ 33,513 $ 19,383 The valuation allowances as of September 30, 2020 and December 31, 2019 primarily related to certain foreign tax credit carryforwards that, in the Company’s present estimation, more likely than not will not be realized. In determining its tax provision or benefit from income taxes, the Company estimates its annual effective tax rate for the full fiscal year and applies that rate to its income or loss before income taxes for the current reporting period. The Company also records discrete items in each respective period as appropriate. The estimated effective tax rate is subject to fluctuation based on the level and mix of earnings and losses by tax jurisdiction, foreign tax rate differentials, and the relative impact of permanent book to tax differences (e.g., non-deductible expenses). Each quarter, a cumulative adjustment is recorded for any fluctuations in the estimated annual effective tax rate as compared to the prior quarter. As a result of these factors, and due to potential changes in the Company’s period-to-period results, fluctuations in the Company’s effective tax rate and respective tax provisions or benefits may occur. For the nine months ended September 30, 2020, the Company recorded a benefit from income taxes of $5.7 million that resulted in an effective tax rate of 36.0%, as compared to a provision for income taxes of $6.4 million that resulted in an effective tax rate of 22.4% for the nine months ended September 30, 2019. The change in the effective tax rate in 2020 is mainly due to certain discrete items and the change in the expected proportion of U.S. versus foreign income between periods. In the United States, the Tax Act reduced the U.S. corporate tax rate from 35% to 21%, effective January 1, 2018. Additionally, the Tax Act requires certain Global Intangible Low Taxed Income (“GILTI”) earned by controlled foreign corporations (“CFCs”) to be included in the gross income of the CFCs’ U.S. shareholder. The Company has elected the “period cost method” and treats taxes due on future U.S. inclusions in taxable income related to GILTI as a current-period expense when incurred. The Tax Act allows a U.S. corporation a deduction equal to a certain percentage of its foreign-derived intangible income (“FDII”). The Company estimated the impact of the GILTI tax and FDII deduction in determining its 2020 annual effective tax rate that is reflected in its benefit from income taxes for the nine months ended September 30, 2020. The Tax Act also imposed a Transition Tax on previously untaxed accumulated and current earnings and profits of certain foreign subsidiaries of the Company. As a result of the Tax Act, the Company recorded a final tax expense of $37.2 million related to the Transition Tax, comprised of a provisional Transition Tax obligation of $40.3 million in 2017 and a subsequent $(3.1) million measurement period adjustment in 2018. As of September 30, 2020, $28.0 million of the Transition Tax was unpaid, of which $25.1 million was recorded in “Other long-term liabilities” and $3.0 million was recorded in “Accounts payable, accrued expenses, and operating lease liabilities” in the Company’s Consolidated Balance Sheet. The Company has elected to pay the Transition Tax over an eight-year period beginning in 2018, as permitted under the Tax Act. The Company earns a significant amount of its revenues outside the United States. The Company repatriated foreign earnings and profits of $151.3 million during 2019 and $186.6 million during 2020. As of September 30, 2020, the remaining balance of the undistributed foreign earnings and profits earned prior to December 31, 2019 is estimated to be $94.8 million. The Company no longer intends to permanently reinvest its foreign earnings and profits. After taking into account the Transition Tax and GILTI tax described above, the Company expects the repatriations during 2019 and 2020 generated only an immaterial U.S. tax expense related to U.S. state income taxes. As of September 30, 2020 and December 31, 2019, the amount of cash and cash equivalents and short-term investments held by the Company’s U.S. entities was $19.0 million and $289.4 million, respectively, and by the Company’s non-U.S. entities was $33.7 million and $276.2 million, respectively. In determining the Company’s (benefit from) provision for income taxes, net deferred tax assets, liabilities, and valuation allowances, management is required to make estimates and judgments related to projections of domestic and foreign profitability, the timing and extent of the utilization of NOL carryforwards, applicable tax rates, transfer pricing methods, and prudent and feasible tax planning strategies. As a multinational company, the Company is required to calculate and provide for estimated income tax liabilities for each of the tax jurisdictions in which it operates. This process involves estimating current tax obligations and exposures in each jurisdiction, as well as making judgments regarding the future recoverability of deferred tax assets. Changes in the estimated level of annual pre-tax income, changes in tax laws, particularly changes related to the utilization of NOLs in various jurisdictions, and changes resulting from tax audits can all affect the overall effective income tax rate, which, in turn, impacts the overall level of income tax expense or benefit and net income. According to the guidance under ASC 740, Income Taxes Estimates and judgments related to the Company’s projections and assumptions are inherently uncertain. Therefore, actual results could differ materially from projections. Currently, the Company expects to use its deferred tax assets, subject to Internal Revenue Code limitations, within the carryforward periods. Valuation allowances have been established where the Company has concluded that it is more likely than not that such deferred tax assets are not realizable. If the Company is unable to sustain or increase profitability in future periods, it may be required to increase the valuation allowance against the deferred tax assets, which could result in a charge that would materially adversely affect net income in the period in which the charge is incurred. |
Share-based Compensation
Share-based Compensation | 9 Months Ended |
Sep. 30, 2020 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Share-based Compensation | (10) Share-based Compensation The Company’s 2013 Stock Incentive Plan (as amended, the “2013 Equity Plan”) authorizes the issuance of various types of share-based awards to the Company’s employees, officers, directors, and other eligible participants. As of September 30, 2020, a total of 2,300,000 shares of the Company’s class A common stock were authorized for issuance under the 2013 Equity Plan. As of September 30, 2020, there were 479,638 shares of class A common stock reserved and available for future issuance under the 2013 Equity Plan. Stock option awards As of September 30, 2020, there were options to purchase 1,487,408 shares of class A common stock outstanding under the 2013 Equity Plan. The following table summarizes the Company’s stock option activity (in thousands, except per share data and years) for the three months ended September 30, 2020: Stock Options Outstanding Weighted Average Aggregate Weighted Average Exercise Price Intrinsic Remaining Contractual Shares Per Share Value Term (Years) Balance as of July 1, 2020 1,481 $ 140.88 Granted 67 $ 144.34 Exercised (13 ) $ 130.59 $ 168 Forfeited/Expired (48 ) $ 143.05 Balance as of September 30, 2020 1,487 $ 141.06 Exercisable as of September 30, 2020 886 $ 138.59 $ 17,825 4.6 Expected to vest as of September 30, 2020 601 $ 144.70 $ 4,637 8.7 Total 1,487 $ 141.06 $ 22,462 6.3 Stock options outstanding as of September 30, 2020 are comprised of the following range of exercise prices per share (in thousands, except per share data and years): Stock Options Outstanding at September 30, 2020 Weighted Average Weighted Average Exercise Price Remaining Contractual Range of Exercise Prices per Share Shares Per Share Term (Years) $119.02 - $140.00 887 $ 125.28 5.4 $140.01 - $160.00 355 $ 151.37 9.3 $160.01 - $180.00 95 $ 169.07 4.0 $180.01 - $201.25 150 $ 192.25 5.9 Total 1,487 $ 141.06 6.3 An aggregate of 1,250 stock options with an aggregate fair value of $0.1 million vested during the three months ended September 30, 2020. The weighted average grant date fair value of stock option awards using the Black-Scholes pricing model was $48.20 for each share subject to a stock option granted during the three months ended September 30, 2020 based on the following assumptions: Three months ended September 30, 2020 Expected term of options in years 6.3 Expected volatility 33.6% - 33.7% Risk-free interest rate 0.3% - 0.4% Expected dividend yield 0.0 % No stock option awards were granted during the three months ended September 30, 2019. For the three and nine months ended September 30, 2020, the Company recognized approximately $2.4 million and $7.8 million, respectively, in share-based compensation expense from stock options granted under the 2013 Equity Plan. For the three and nine months ended September 30, 2019, the Company recognized approximately $1.8 million and $7.8 million, respectively, in share-based compensation expense from stock options granted under the 2013 Equity Plan. As of September 30, 2020, there was approximately $24.7 million of total unrecognized share-based compensation expense related to unvested stock options. The Company expects to recognize this remaining share-based compensation expense over a weighted average vesting period of approximately 2.7 years. Other stock-based awards During the three months ended September 30, 2020, the Company did not grant any “other stock-based awards” under the 2013 Equity Plan. For each of the three and nine months ended September 30, 2020 and 2019, the Company did not recognize a material amount of share-based compensation expense from other stock-based awards. As of September 30, 2020, there was approximately $0.2 million of total unrecognized share-based compensation expense related to other stock-based awards. The Company expects to recognize this remaining share-based compensation expense over a weighted average vesting period of approximately 1.7 years, subject to additional fair value adjustments through the earlier of settlement or expiration. |
Common Equity and Earnings per
Common Equity and Earnings per Share | 9 Months Ended |
Sep. 30, 2020 | |
Earnings Per Share [Abstract] | |
Common Equity and Earnings per Share | (11) Common Equity and Earnings per Share The Company has two classes of common stock: class A common stock and class B common stock. Holders of class A common stock generally have the same rights, including rights to dividends, as holders of class B common stock, except that holders of class A common stock have one vote per share while holders of class B common stock have 10 votes per share. Each share of class B common stock is convertible at any time, at the option of the holder, into one share of class A common stock. As such, basic and fully diluted earnings per share for class A common stock and for class B common stock are the same. The Company has never declared or paid any cash dividends on either class A or class B common stock. As of September 30, 2020 and December 31, 2019, there were no shares of preferred stock issued or outstanding. Potential shares of common stock are included in the diluted earnings per share calculation when dilutive. Potential shares of common stock, consisting of common stock issuable upon exercise of outstanding stock options, are calculated using the treasury stock method. For the three and nine months ended September 30, 2020, stock options issued under the 2013 Equity Plan to purchase a weighted average of approximately 1,476,000 and 1,536,000 shares of class A common stock, respectively, were excluded from the diluted earnings per share calculation because their impact would have been anti-dilutive. For the three and nine months ended September 30, 2019 , stock options issued un der the 2013 Equity Plan to purchase a weighted average of approximately 863,000 and 925,000 shares of class A common stock, respectively, were excluded from the diluted earnings per share calculation because their impact would have been anti-dilutive. |
Segment Information
Segment Information | 9 Months Ended |
Sep. 30, 2020 | |
Segment Reporting [Abstract] | |
Segment Information | (12) Segment Information The Company manages its business in one reportable operating segment. The Company’s one reportable operating segment is engaged in the design, development, marketing, and sales of its software platform through licensing arrangements and cloud subscriptions and related services. The following table presents total revenues, gross profit, and long-lived assets, excluding long-term deferred tax assets, (in thousands) according to geographic region: Geographic regions: Domestic EMEA Other Regions Consolidated Three months ended September 30, 2020 Total revenues $ 78,763 $ 36,884 $ 11,761 $ 127,408 Gross profit $ 67,055 $ 29,728 $ 8,889 $ 105,672 Three months ended September 30, 2019 Total revenues $ 68,063 $ 39,184 $ 12,446 $ 119,693 Gross profit $ 54,410 $ 31,313 $ 10,155 $ 95,878 Nine months ended September 30, 2020 Total revenues $ 206,318 $ 109,835 $ 33,263 $ 349,416 Gross profit $ 166,566 $ 86,760 $ 25,820 $ 279,146 Nine months ended September 30, 2019 Total revenues $ 200,282 $ 115,816 $ 36,698 $ 352,796 Gross profit $ 156,938 $ 91,520 $ 29,000 $ 277,458 As of September 30, 2020 Long-lived assets $ 499,074 $ 11,615 $ 10,243 $ 520,932 As of December 31, 2019 Long-lived assets $ 118,168 $ 13,636 $ 11,912 $ 143,716 The domestic region consists of the United States and Canada. The EMEA region includes operations in Europe, the Middle East, and Africa. The other regions include all other foreign countries, generally comprising Latin America and the Asia Pacific region. For the three and nine months ended September 30, 2020 and 2019, no individual foreign country accounted for 10% or more of total consolidated revenues. For the three and nine months ended September 30, 2020 and 2019, no individual customer accounted for 10% or more of total consolidated revenues. As of September 30, 2020 and December 31, 2019, no individual foreign country accounted for 10% or more of total consolidated assets. |
Sale of Domain Name
Sale of Domain Name | 9 Months Ended |
Sep. 30, 2020 | |
Other Nonoperating Income Expense [Abstract] | |
Sale of Domain Name | (13) Sale of Domain Name On May 30, 2019, the Company completed the sale of its Voice.com domain name for consideration of $30.0 million in cash (the “Domain Name Sale”). As of the date of the Domain Name Sale, the Company had no unamortized costs associated with the Voice.com domain name asset. The Company did not incur any material costs related to the Domain Name Sale. The Domain Name Sale resulted in a gain of $29.8 million in the second quarter of 2019, which was recorded as “Other income, net” for such quarter in the Consolidated Statements of Operations. The Company also recorded a discrete $8.1 million tax provision in the second quarter of 2019 related to the Domain Name Sale. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation | (a) Basis of Presentation The accompanying Consolidated Financial Statements of MicroStrategy Incorporated (“MicroStrategy” or the “Company”) are unaudited. In the opinion of management, all adjustments necessary for a fair statement of financial position and results of operations have been included. All such adjustments are of a normal recurring nature, unless otherwise disclosed. Interim results are not necessarily indicative of results for a full year. Certain amounts in the prior year’s Consolidated Statements of Cash Flows have been reclassified to conform to current year presentation. In particular, reductions in the carrying amount of right-of-use (“ROU”) assets have been reclassified from “Depreciation and amortization” to “Reduction in carrying amount of right-of-use assets” in operating activities. As discussed in Note 2, Recent Accounting Standards, to the Consolidated Financial Statements, the Company adopted Accounting Standards Update No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, The Consolidated Financial Statements and Notes to Consolidated Financial Statements are presented as required by the United States Securities and Exchange Commission (“SEC”) and do not contain certain information included in the Company’s annual financial statements and notes. These financial statements should be read in conjunction with the Company’s audited financial statements and the notes thereto filed with the SEC in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. Except for a new accounting policy to account for the Company’s acquisition of digital assets and its adoption of ASU 2016-13, as discussed below, there have been no significant changes in the Company’s accounting policies since December 31, 2019. The accompanying Consolidated Financial Statements include the accounts of the Company and its subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. The Company is not aware of any material subsequent event that would require recognition or disclosure. |
Short-term Investments | (b) Short-term Investments The Company has periodically invested a portion of its cash in short-term investment instruments. All highly liquid investments with stated maturity dates between three months and one year from the purchase date are classified as short-term investments. The Company determines the appropriate classification of its short-term investments at the time of purchase and reassesses the appropriateness of the classification at each reporting date. All of the Company’s short-term investments are in U.S. Treasury securities. All short-term investments have been classified as available-for-sale and are reported at fair value within “Short-term investments” on the accompanying Consolidated Balance Sheets. The fair value of the Company’s short-term investments is determined based on quoted market prices in active markets for identical securities (Level 1 inputs). Premiums and discounts related to the Company’s short-term investments are amortized over the life of the investment and recorded in earnings. Each reporting period, the Company determines the amount of unrealized holding gains and losses on each individual security by comparing the fair value to the amortized cost. Unrealized holding gains and unrealized holding losses that are not a result of a credit loss are reported in other comprehensive income (loss) until realized. Beginning January 1, 2020, unrealized holding losses that are a result of a credit loss are recorded in earnings, with the establishment of an allowance for credit losses. As of September 30, 2020, the Company did not hold any short-term investments. |
Credit Losses on Accounts Receivable | (c) Credit Losses on Accounts Receivable The Company maintains an allowance for credit losses on its accounts receivable balances, which represents its best estimate of current expected credit losses over the contractual life of the accounts receivable. Beginning January 1, 2020, when evaluating the adequacy of its allowance for credit losses each reporting period, the Company analyzes accounts receivable balances with similar risk characteristics on a collective basis, considering factors such as the aging of receivable balances, payment terms, geographic location, historical loss experience, current information, and future expectations. Each reporting period, the Company reassesses whether any accounts receivable no longer share similar risk characteristics and should instead be evaluated as part of another pool or on an individual basis. Changes to the allowance for credit losses are adjusted through credit loss expense, which is presented within “General and administrative” operating expenses in the Consolidated Statements of Operations. |
Digital Assets | (d) Digital Assets During the third quarter of 2020, the Company purchased an aggregate of $425.0 million in digital assets, comprised solely of bitcoin. The Company accounts for its digital assets as indefinite-lived intangible assets in accordance with Accounting Standards Codification (“ASC”) 350, Intangibles—Goodwill and Other The Company determines the fair value of its bitcoin on a nonrecurring basis in accordance with ASC 820, Fair Value Measurement Impairment losses are recognized as “Digital asset impairment losses” in the Company’s Consolidated Statements of Operations in the period in which the impairment is identified. The impaired digital assets are written down to their fair value at the time of impairment and this new cost basis will not be adjusted upward for any subsequent increase in fair value. Gains (if any) are not recorded until realized upon sale, at which point they would be presented net of any impairment losses in the Company’s Consolidated Statements of Operations. In determining the gain to be recognized upon sale, the Company calculates the difference between the sales price and carrying value of the specific bitcoins sold immediately prior to sale. See Note 4, Digital Assets, to the Consolidated Financial Statements for further information regarding the Company’s purchases of digital assets. |
Income Taxes | The Company recognizes estimated accrued interest related to unrecognized income tax benefits in the (benefit from) provision for income tax accounts.Additionally, the Tax Act requires certain Global Intangible Low Taxed Income (“GILTI”) earned by controlled foreign corporations (“CFCs”) to be included in the gross income of the CFCs’ U.S. shareholder. The Company has elected the “period cost method” and treats taxes due on future U.S. inclusions in taxable income related to GILTI as a current-period expense when incurred. The Tax Act allows a U.S. corporation a deduction equal to a certain percentage of its foreign-derived intangible income (“FDII”).In determining the Company’s (benefit from) provision for income taxes, net deferred tax assets, liabilities, and valuation allowances, management is required to make estimates and judgments related to projections of domestic and foreign profitability, the timing and extent of the utilization of NOL carryforwards, applicable tax rates, transfer pricing methods, and prudent and feasible tax planning strategies. As a multinational company, the Company is required to calculate and provide for estimated income tax liabilities for each of the tax jurisdictions in which it operates. This process involves estimating current tax obligations and exposures in each jurisdiction, as well as making judgments regarding the future recoverability of deferred tax assets. Changes in the estimated level of annual pre-tax income, changes in tax laws, particularly changes related to the utilization of NOLs in various jurisdictions, and changes resulting from tax audits can all affect the overall effective income tax rate, which, in turn, impacts the overall level of income tax expense or benefit and net income. Estimates and judgments related to the Company’s projections and assumptions are inherently uncertain. Therefore, actual results could differ materially from projections. Currently, the Company expects to use its deferred tax assets, subject to Internal Revenue Code limitations, within the carryforward periods. Valuation allowances have been established where the Company has concluded that it is more likely than not that such deferred tax assets are not realizable. If the Company is unable to sustain or increase profitability in future periods, it may be required to increase the valuation allowance against the deferred tax assets, which could result in a charge that would materially adversely affect net income in the period in which the charge is incurred. |
Contract Balances (Tables)
Contract Balances (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Contract With Customer Asset And Liability [Abstract] | |
Schedule of Accounts Receivable | Accounts receivable (in thousands) consisted of the following, as of: September 30, December 31, 2020 2019 Billed and billable $ 151,234 $ 165,153 Less: allowance for credit losses (2,722 ) (1,637 ) Accounts receivable, net $ 148,512 $ 163,516 |
Deferred Revenue and Advance Payments | Deferred revenue and advance payments (in thousands) from customers consisted of the following, as of: September 30, December 31, 2020 2019 Current: Deferred product licenses revenue $ 186 $ 481 Deferred subscription services revenue 19,535 16,561 Deferred product support revenue 134,632 161,670 Deferred other services revenue 6,492 8,395 Total current deferred revenue and advance payments $ 160,845 $ 187,107 Non-current: Deferred product licenses revenue $ 140 $ 293 Deferred subscription services revenue 5,988 97 Deferred product support revenue 4,759 3,417 Deferred other services revenue 770 537 Total non-current deferred revenue and advance payments $ 11,657 $ 4,344 |
Income Taxes (Tables)
Income Taxes (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Company's Deferred Tax Assets, Net of Deferred Tax Liabilities and Valuation Allowance | The following table summarizes the Company’s deferred tax assets, net of deferred tax liabilities and valuation allowance (in thousands), as of: September 30, December 31, 2020 2019 Deferred tax assets, net of deferred tax liabilities $ 35,651 $ 21,513 Valuation allowance (2,138 ) (2,130 ) Deferred tax assets, net of deferred tax liabilities and valuation allowance $ 33,513 $ 19,383 |
Share-based Compensation (Table
Share-based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Summary of Stock Option Activity | The following table summarizes the Company’s stock option activity (in thousands, except per share data and years) for the three months ended September 30, 2020: Stock Options Outstanding Weighted Average Aggregate Weighted Average Exercise Price Intrinsic Remaining Contractual Shares Per Share Value Term (Years) Balance as of July 1, 2020 1,481 $ 140.88 Granted 67 $ 144.34 Exercised (13 ) $ 130.59 $ 168 Forfeited/Expired (48 ) $ 143.05 Balance as of September 30, 2020 1,487 $ 141.06 Exercisable as of September 30, 2020 886 $ 138.59 $ 17,825 4.6 Expected to vest as of September 30, 2020 601 $ 144.70 $ 4,637 8.7 Total 1,487 $ 141.06 $ 22,462 6.3 |
Schedule of Range of Exercise Prices per Share | Stock options outstanding as of September 30, 2020 are comprised of the following range of exercise prices per share (in thousands, except per share data and years): Stock Options Outstanding at September 30, 2020 Weighted Average Weighted Average Exercise Price Remaining Contractual Range of Exercise Prices per Share Shares Per Share Term (Years) $119.02 - $140.00 887 $ 125.28 5.4 $140.01 - $160.00 355 $ 151.37 9.3 $160.01 - $180.00 95 $ 169.07 4.0 $180.01 - $201.25 150 $ 192.25 5.9 Total 1,487 $ 141.06 6.3 |
Assumptions Used in Black-Scholes Pricing Model | The weighted average grant date fair value of stock option awards using the Black-Scholes pricing model was $48.20 for each share subject to a stock option granted during the three months ended September 30, 2020 based on the following assumptions: Three months ended September 30, 2020 Expected term of options in years 6.3 Expected volatility 33.6% - 33.7% Risk-free interest rate 0.3% - 0.4% Expected dividend yield 0.0 % |
Segment Information (Tables)
Segment Information (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Segment Reporting [Abstract] | |
Revenues and Long-Lived Assets, by Geographic Region | The following table presents total revenues, gross profit, and long-lived assets, excluding long-term deferred tax assets, (in thousands) according to geographic region: Geographic regions: Domestic EMEA Other Regions Consolidated Three months ended September 30, 2020 Total revenues $ 78,763 $ 36,884 $ 11,761 $ 127,408 Gross profit $ 67,055 $ 29,728 $ 8,889 $ 105,672 Three months ended September 30, 2019 Total revenues $ 68,063 $ 39,184 $ 12,446 $ 119,693 Gross profit $ 54,410 $ 31,313 $ 10,155 $ 95,878 Nine months ended September 30, 2020 Total revenues $ 206,318 $ 109,835 $ 33,263 $ 349,416 Gross profit $ 166,566 $ 86,760 $ 25,820 $ 279,146 Nine months ended September 30, 2019 Total revenues $ 200,282 $ 115,816 $ 36,698 $ 352,796 Gross profit $ 156,938 $ 91,520 $ 29,000 $ 277,458 As of September 30, 2020 Long-lived assets $ 499,074 $ 11,615 $ 10,243 $ 520,932 As of December 31, 2019 Long-lived assets $ 118,168 $ 13,636 $ 11,912 $ 143,716 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies - Additional Information (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Indefinite Lived Intangible Assets Excluding Goodwill [Abstract] | ||||
Short-term investments | $ 0 | $ 0 | $ 108,919 | |
Purchases of digital assets | $ 425,000 | $ 425,000 | $ 0 |
Recent Accounting Standards - A
Recent Accounting Standards - Additional Information (Detail) - USD ($) | Sep. 30, 2020 | Jan. 01, 2020 | Dec. 31, 2019 |
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | |||
Retained earnings | $ 573,304,000 | $ 583,489,000 | |
Short-term investments | $ 0 | $ 108,919,000 | |
Minimum | US Treasury Securities | |||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | |||
Available-for-sale securities maturity range | 3 months | ||
Maximum | US Treasury Securities | |||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | |||
Available-for-sale securities maturity range | 1 year | ||
ASU 2016-13 | Revision Of Prior Period Change In Accounting Principle Adjustment | |||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | |||
Retained earnings | $ 0 | ||
ASU 2018-15 | |||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | |||
Material capitalized implementation costs | $ 0 |
Short-term Investments - Additi
Short-term Investments - Additional Information (Detail) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Summary Of Investment Holdings [Line Items] | ||
Short-term investments | $ 0 | $ 108,919 |
US Treasury Securities | ||
Summary Of Investment Holdings [Line Items] | ||
Available-for-sale securities, amortized cost | 108,800 | |
Available-for-sale securities, fair value | 108,900 | |
Available-for-sale securities, unrealized loss position | $ 0 |
Digital Assets - Additional Inf
Digital Assets - Additional Information (Detail) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020USD ($)Bitcoin | Sep. 30, 2019USD ($) | Sep. 30, 2020USD ($) | Sep. 30, 2019USD ($) | Dec. 31, 2019USD ($) | |
Intangible Assets Net Excluding Goodwill [Abstract] | |||||
Number of bitcoins purchased | Bitcoin | 38,250 | ||||
Purchases of digital assets, amount | $ 425,000 | $ 425,000 | $ 0 | ||
Digital asset impairment losses | 44,242 | $ 0 | 44,242 | $ 0 | |
Digital assets | 380,758 | 380,758 | $ 0 | ||
Cumulative impairment of digital assets | 44,200 | $ 44,200 | |||
Sale of digital assets | $ 0 |
Schedule of Accounts Receivable
Schedule of Accounts Receivable (Detail) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Receivables [Abstract] | ||
Billed and billable | $ 151,234 | $ 165,153 |
Less: allowance for credit losses | (2,722) | (1,637) |
Accounts receivable, net | $ 148,512 | $ 163,516 |
Contract Balances - Additional
Contract Balances - Additional Information (Detail) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Contract With Customer Asset And Liability [Line Items] | |||||
Revenue, Remaining performance obligation | $ 172,500,000 | $ 172,500,000 | |||
Prepaid Expenses and Other Current Assets | |||||
Contract With Customer Asset And Liability [Line Items] | |||||
Assets impairment charges | 0 | $ 0 | 0 | $ 0 | |
Contract assets | 1,100,000 | 1,100,000 | $ 1,200,000 | ||
Current Deferred Revenue and Advanced Payments | |||||
Contract With Customer Asset And Liability [Line Items] | |||||
Revenue recognized from beginning deferred revenue | $ 37,300,000 | $ 36,100,000 | $ 160,500,000 | $ 154,100,000 |
Deferred Revenue and Advance Pa
Deferred Revenue and Advance Payments (Detail) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Deferred Revenue Disclosure [Abstract] | ||
Deferred product licenses revenue, Current | $ 186 | $ 481 |
Deferred subscription services revenue, Current | 19,535 | 16,561 |
Deferred product support revenue, Current | 134,632 | 161,670 |
Deferred other services revenue, Current | 6,492 | 8,395 |
Total current deferred revenue and advance payments | 160,845 | 187,107 |
Deferred product licenses revenue, Non-current | 140 | 293 |
Deferred subscription services revenue, Non-current | 5,988 | 97 |
Deferred product support revenue, Non-current | 4,759 | 3,417 |
Deferred other services revenue, Non-current | 770 | 537 |
Total non-current deferred revenue and advance payments | $ 11,657 | $ 4,344 |
Contract Balances - Additiona_2
Contract Balances - Additional Information (Detail1) $ in Millions | Sep. 30, 2020USD ($) |
Contract With Customer Asset And Liability [Line Items] | |
Revenue, Remaining performance obligation | $ 172.5 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2020-10-01 | |
Contract With Customer Asset And Liability [Line Items] | |
Revenue, Remaining performance obligations, Expected timing of satisfaction, Period | 12 months |
Revenue, Remaining performance obligation | $ 160.8 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2021-10-01 | |
Contract With Customer Asset And Liability [Line Items] | |
Revenue, Remaining performance obligations, Expected timing of satisfaction, Period | |
Revenue, Remaining performance obligation | $ 11.7 |
Leases - Additional Information
Leases - Additional Information (Detail) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Operating Leased Assets [Line Items] | |||
Operating lease, right of use asset | $ 79,296 | $ 85,538 | |
Right of use asset obtained in exchange for operating lease liability | 700 | $ 5,000 | |
UNITED STATES | |||
Operating Leased Assets [Line Items] | |||
Operating lease, right of use asset | 67,600 | 71,000 | |
Operating lease, liability | 93,100 | 97,500 | |
UNITED STATES | Northern Virginia Office Space | |||
Operating Leased Assets [Line Items] | |||
Operating lease, right of use asset | 64,100 | 66,900 | |
Operating lease, liability | 89,600 | 93,300 | |
Non-US | |||
Operating Leased Assets [Line Items] | |||
Operating lease, right of use asset | 11,700 | 14,500 | |
Operating lease, liability | $ 12,600 | $ 15,500 |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Detail) R$ in Millions, $ in Millions | May 22, 2020USD ($) | May 22, 2020BRL (R$) | Feb. 06, 2020USD ($) | Feb. 06, 2020BRL (R$) |
Commitments And Contingencies Disclosure [Abstract] | ||||
Maximum amount frozen in Brazilian subsidiary bank accounts | $ 2.3 | R$ 10.0 | ||
Maximum amount unfrozen in brazilian subsidiary bank accounts | $ 2.3 | R$ 10.0 |
Treasury Stock - Additional Inf
Treasury Stock - Additional Information (Detail) - USD ($) | Aug. 11, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2020 | Sep. 30, 2019 |
Equity, Class of Treasury Stock [Line Items] | |||||||||
Treasury stock, shares repurchased value | $ 61,349,000 | $ 11,128,000 | $ 50,747,000 | $ 24,475,000 | $ 48,244,000 | ||||
Treasury stock, shares | 8,684,000 | 7,807,000 | 8,684,000 | ||||||
Treasury stock, cost | $ 782,104,000 | $ 658,880,000 | $ 782,104,000 | ||||||
Class A | |||||||||
Equity, Class of Treasury Stock [Line Items] | |||||||||
Treasury stock, shares repurchased | 0 | 0 | 0 | 0 | 0 | ||||
Treasury stock, shares repurchased value | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | ||||
Class A | Share Repurchase Program | |||||||||
Equity, Class of Treasury Stock [Line Items] | |||||||||
Shares repurchased program expiration date | Apr. 29, 2023 | ||||||||
Stock repurchase program, authorized amount | $ 800,000,000 | $ 800,000,000 | |||||||
Treasury stock, shares repurchased | 0 | 0 | 444,769 | 362,148 | |||||
Shares repurchased, average price per share | $ 139.12 | $ 133.21 | |||||||
Treasury stock, shares repurchased value | $ 61,900,000 | $ 48,200,000 | |||||||
Treasury stock, shares | 5,674,226 | 5,674,226 | |||||||
Shares repurchased, average price per share | $ 104.13 | $ 104.13 | |||||||
Treasury stock, cost | $ 590,900,000 | $ 590,900,000 | |||||||
Stock remaining available for repurchase | $ 209,100,000 | $ 209,100,000 | |||||||
Class A | Tender Offer | |||||||||
Equity, Class of Treasury Stock [Line Items] | |||||||||
Treasury stock, shares repurchased | 432,313 | 432,313 | |||||||
Shares repurchased, average price per share | $ 140 | ||||||||
Treasury stock, shares repurchased value | $ 61,300,000 | $ 61,300,000 | |||||||
Tender offer, purchase price maximum | $ 140 | ||||||||
Tender offer, purchase price minimum | $ 122 | ||||||||
Tender offer expiration date | Sep. 10, 2020 | ||||||||
Expenses and fees related to tender offer | $ 800,000 | $ 800,000 | |||||||
Class A | Tender Offer | Maximum | |||||||||
Equity, Class of Treasury Stock [Line Items] | |||||||||
Tender offer program, authorized amount | $ 250,000,000 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Detail) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Income Taxes | |||||||
Unrecognized tax benefits | $ 2,700,000 | $ 2,700,000 | |||||
Unrecognized tax benefits would impact the effective tax rate | 2,600,000 | 2,600,000 | |||||
Interest accrued | 300,000 | $ 300,000 | |||||
Effective tax rate from operations | 36.00% | 22.40% | |||||
(Benefit from) provision for income taxes | (8,804,000) | $ (291,000) | $ (5,735,000) | $ 6,419,000 | |||
Effective U.S corporate tax rate | 21.00% | 35.00% | |||||
Provision for transition tax | $ 37,200,000 | $ 40,300,000 | |||||
Measurement period adjustment to reduce transition tax | $ (3,100,000) | ||||||
Transition tax, unpaid | 28,000,000 | $ 28,000,000 | |||||
Transition Tax over an eight-year period beginning | 2018 | ||||||
Digital asset impairment losses | 44,242,000 | $ 0 | $ 44,242,000 | $ 0 | |||
Tax benefit of impairment losses | 12,800,000 | 12,800,000 | |||||
Other Long-term Liabilities | |||||||
Income Taxes | |||||||
Transition tax, unpaid | 25,100,000 | 25,100,000 | |||||
Accounts Payable, Accrued Expenses and Operating Lease Liabilities | |||||||
Income Taxes | |||||||
Transition tax, unpaid | 3,000,000 | 3,000,000 | |||||
U.S | |||||||
Income Taxes | |||||||
Cash and cash equivalents and short-term investments | 19,000,000 | $ 19,000,000 | $ 289,400,000 | ||||
U.S | Earliest Tax Year | |||||||
Income Taxes | |||||||
Tax years subject to examination | 2016 | ||||||
Italy | Earliest Tax Year | |||||||
Income Taxes | |||||||
Tax years subject to examination | 2016 | ||||||
Poland | Earliest Tax Year | |||||||
Income Taxes | |||||||
Tax years subject to examination | 2015 | ||||||
Spain | Earliest Tax Year | |||||||
Income Taxes | |||||||
Tax years subject to examination | 2016 | ||||||
United Kingdom | Earliest Tax Year | |||||||
Income Taxes | |||||||
Tax years subject to examination | 2018 | ||||||
Germany | Earliest Tax Year | |||||||
Income Taxes | |||||||
Tax years subject to examination | 2016 | ||||||
Foreign | |||||||
Income Taxes | |||||||
Cash and cash equivalents and short-term investments | 33,700,000 | $ 33,700,000 | 276,200,000 | ||||
Foreign earnings repatriated | 186,600,000 | $ 151,300,000 | |||||
Undistributed foreign earnings | $ 94,800 | $ 94,800 |
Company's Deferred Tax Assets,
Company's Deferred Tax Assets, Net of Deferred Tax Liabilities and Valuation Allowance (Detail) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Income Tax Disclosure [Abstract] | ||
Deferred tax assets, net of deferred tax liabilities | $ 35,651 | $ 21,513 |
Valuation allowance | (2,138) | (2,130) |
Deferred tax assets, net of deferred tax liabilities and valuation allowance | $ 33,513 | $ 19,383 |
Share-based Compensation - Addi
Share-based Compensation - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Jun. 30, 2020 | |
Stock Option Awards | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Options outstanding, shares | 1,487,000 | 1,487,000 | 1,481,000 | ||
Stock option awards granted | 67,000 | ||||
2013 Equity Plan | Stock Option Awards | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Stock options vested | 1,250 | ||||
Aggregate fair value of stock option vested | $ 0.1 | ||||
Weighted average grant date fair value of stock option awards | $ 48.20 | ||||
Share-based compensation expense recognized | $ 2.4 | $ 1.8 | $ 7.8 | $ 7.8 | |
Unrecognized share-based compensation expense | $ 24.7 | $ 24.7 | |||
Unrecognized compensation expense expected to be recognized | 2 years 8 months 12 days | ||||
Stock option awards granted | 0 | ||||
2013 Equity Plan | Other Stock-based Awards | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Unrecognized compensation expense expected to be recognized | 1 year 8 months 12 days | ||||
Other stock-based awards granted | 0 | ||||
Unrecognized share-based compensation expense | $ 0.2 | $ 0.2 | |||
2013 Equity Plan | Class A | Stock Option Awards | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Options outstanding, shares | 1,487,408 | 1,487,408 | |||
2013 Equity Plan | Class A | Employees, Officers, and Directors | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Share-based compensation, stock authorized | 2,300,000 | 2,300,000 | |||
Shares of class A common stock reserved and available for future issuance | 479,638 | 479,638 |
Summary of Stock Option Activit
Summary of Stock Option Activity (Detail) - Stock Option Awards $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended |
Sep. 30, 2020USD ($)$ / sharesshares | |
Options outstanding, shares | |
Beginning Balance | shares | 1,481 |
Granted | shares | 67 |
Exercised | shares | (13) |
Forfeited/Expired | shares | (48) |
Ending Balance | shares | 1,487 |
Exercisable as of September 30, 2020 | shares | 886 |
Expected to vest as of September 30, 2020 | shares | 601 |
Total | shares | 1,487 |
Weighted Average Exercise Price Per Share | |
Beginning Balance | $ / shares | $ 140.88 |
Granted | $ / shares | 144.34 |
Exercised | $ / shares | 130.59 |
Forfeited/Expired | $ / shares | 143.05 |
Ending Balance | $ / shares | 141.06 |
Exercisable as of September 30, 2020 | $ / shares | 138.59 |
Expected to vest as of September 30, 2020 | $ / shares | 144.70 |
Total | $ / shares | $ 141.06 |
Aggregate Intrinsic Value | |
Exercised | $ | $ 168 |
Exercisable as of September 30, 2020 | $ | 17,825 |
Expected to vest as of September 30, 2020 | $ | 4,637 |
Total | $ | $ 22,462 |
Weighted Average Remaining Contractual Term (Years) | |
Exercisable as of September 30, 2020 | 4 years 7 months 6 days |
Expected to vest as of September 30, 2020 | 8 years 8 months 12 days |
Total | 6 years 3 months 18 days |
Schedule of Range of Exercise P
Schedule of Range of Exercise Prices per Share (Detail) - Stock Option Awards shares in Thousands | 9 Months Ended |
Sep. 30, 2020$ / sharesshares | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Shares, Stock Options Outstanding | shares | 1,487 |
Weighted Average Exercise Price Per Share, Stock Options Outstanding | $ 141.06 |
Weighted Average Remaining Contractual Term (Years), Stock Options Outstanding | 6 years 3 months 18 days |
119.02 - 140.00 | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Range of Exercise Prices per Share, minimum | $ 119.02 |
Range of Exercise Prices per Share, maximum | $ 140 |
Shares, Stock Options Outstanding | shares | 887 |
Weighted Average Exercise Price Per Share, Stock Options Outstanding | $ 125.28 |
Weighted Average Remaining Contractual Term (Years), Stock Options Outstanding | 5 years 4 months 24 days |
140.01 - 160.00 | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Range of Exercise Prices per Share, minimum | $ 140.01 |
Range of Exercise Prices per Share, maximum | $ 160 |
Shares, Stock Options Outstanding | shares | 355 |
Weighted Average Exercise Price Per Share, Stock Options Outstanding | $ 151.37 |
Weighted Average Remaining Contractual Term (Years), Stock Options Outstanding | 9 years 3 months 18 days |
160.01 - 180.00 | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Range of Exercise Prices per Share, minimum | $ 160.01 |
Range of Exercise Prices per Share, maximum | $ 180 |
Shares, Stock Options Outstanding | shares | 95 |
Weighted Average Exercise Price Per Share, Stock Options Outstanding | $ 169.07 |
Weighted Average Remaining Contractual Term (Years), Stock Options Outstanding | 4 years |
180.01 - 201.25 | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Range of Exercise Prices per Share, minimum | $ 180.01 |
Range of Exercise Prices per Share, maximum | $ 201.25 |
Shares, Stock Options Outstanding | shares | 150 |
Weighted Average Exercise Price Per Share, Stock Options Outstanding | $ 192.25 |
Weighted Average Remaining Contractual Term (Years), Stock Options Outstanding | 5 years 10 months 24 days |
Assumptions Used in Black-Schol
Assumptions Used in Black-Scholes Pricing Model (Detail) - Stock Option Awards | 3 Months Ended |
Sep. 30, 2020 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expected term of options in years | 6 years 3 months 18 days |
Expected volatility, minimum | 33.60% |
Expected volatility, maximum | 33.70% |
Risk-free interest rate, minimum | 0.30% |
Risk-free interest rate, maximum | 0.40% |
Expected dividend yield | 0.00% |
Common Equity and Earnings pe_2
Common Equity and Earnings per Share - Additional Information (Detail) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Class of Stock | |||||
Payments of dividends, common stock | $ 0 | $ 0 | |||
Preferred stock, shares issued | 0 | 0 | 0 | ||
Preferred stock, shares outstanding | 0 | 0 | 0 | ||
Class A | |||||
Class of Stock | |||||
Common stock, votes per share | one | ||||
Class A | 2013 Plan | |||||
Class of Stock | |||||
Shares issuable under stock options excluded from calculation of diluted earnings per share | 1,476,000 | 863,000 | 1,536,000 | 925,000 | |
Class B Convertible | |||||
Class of Stock | |||||
Common stock, votes per share | 10 |
Segment Information - Additiona
Segment Information - Additional Information (Detail) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020CountryCustomer | Sep. 30, 2019CountryCustomer | Sep. 30, 2020SegmentCountryCustomer | Sep. 30, 2019CountryCustomer | Dec. 31, 2019Country | |
Segment Reporting Information | |||||
Number of operating segments | Segment | 1 | ||||
Geographic Concentration Risk | |||||
Segment Reporting Information | |||||
Number Of Individual Country accounted for 10% or more of total revenues | 0 | 0 | 0 | 0 | |
Number Of Individual country accounted for 10% or more of total consolidated assets | 0 | 0 | 0 | ||
Customer Concentration Risk | Sales Revenue, Goods, Net | |||||
Segment Reporting Information | |||||
Number Of Individual Customer accounted for 10% or more of total consolidated revenues | Customer | 0 | 0 | 0 | 0 |
Total Revenues Gross Profit and
Total Revenues Gross Profit and Long Lived Assets Excluding Long Term Deferred Tax Assets (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Revenues from External Customers and Long-Lived Assets | |||||
Total revenues | $ 127,408 | $ 119,693 | $ 349,416 | $ 352,796 | |
Gross profit | 105,672 | 95,878 | 279,146 | 277,458 | |
Long-lived assets | 520,932 | 520,932 | $ 143,716 | ||
Domestic | |||||
Revenues from External Customers and Long-Lived Assets | |||||
Total revenues | 78,763 | 68,063 | 206,318 | 200,282 | |
Gross profit | 67,055 | 54,410 | 166,566 | 156,938 | |
Long-lived assets | 499,074 | 499,074 | 118,168 | ||
EMEA | |||||
Revenues from External Customers and Long-Lived Assets | |||||
Total revenues | 36,884 | 39,184 | 109,835 | 115,816 | |
Gross profit | 29,728 | 31,313 | 86,760 | 91,520 | |
Long-lived assets | 11,615 | 11,615 | 13,636 | ||
Other Regions | |||||
Revenues from External Customers and Long-Lived Assets | |||||
Total revenues | 11,761 | 12,446 | 33,263 | 36,698 | |
Gross profit | 8,889 | $ 10,155 | 25,820 | $ 29,000 | |
Long-lived assets | $ 10,243 | $ 10,243 | $ 11,912 |
Sale of Domain Name - Additiona
Sale of Domain Name - Additional Information (Detail) - USD ($) | May 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Jun. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 |
Other Nonoperating Income And Expense [Line Items] | ||||||
Provision for income taxes | $ (8,804,000) | $ (291,000) | $ (5,735,000) | $ 6,419,000 | ||
Voice.com Domain Name | ||||||
Other Nonoperating Income And Expense [Line Items] | ||||||
Proceeds from third-party for sale of domain name | $ 30,000,000 | |||||
Unamortized cost | $ 0 | |||||
Provision for income taxes | $ 8,100,000 | |||||
Voice.com Domain Name | Other Income, Net | ||||||
Other Nonoperating Income And Expense [Line Items] | ||||||
Gain on sale of domain name | $ 29,800,000 |